Employer Health Insurance: Average Employee Health Insurance Cost in 2025

Current costs of employer-sponsored coverage (2025)

According to the Kaiser Family Foundation (KFF) 26th Employer Health Benefits Survey, the average annual premium for an employee in 2024 for employer-sponsored health coverage increased by 6 percent to $8,951 for single coverage, and $25,572 for family coverage, up another 7 percent from the previous year. On average, employees covered $1,368 (16 percent) of the premium for single coverage and $6,296 (25 percent) for family coverage, slightly less than in 2023.

Employers typically cover the bulk of these premiums. Aon projected the average employer health insurance cost to surpass $17,000 per employee in 2026, a 9.5 percent jump from 2025. These costs vary widely depending on the plan type, business size, and location.

Some employers are seeking to decrease their employees’ healthcare expenses by covering treatments or expanding what they offer. These services could be considered fringe benefits, such as:

• Telehealth behavioral mental health services
• Specialty drug access, including GLP-1 drugs for weight loss
• IVF and other family planning services
• Concierge services
• Health and wellness promotions within the workplace
• Access to centers of excellence
• Working spouse surcharges

Cost trends and what’s ahead

Healthcare insurance costs continue to rise each year, outpacing general inflation. In 2025, employer health insurance costs are projected to increase by up to 9%. This annual increase is even greater than the 6.4% increase seen between 2023 and 2024.

Small-to-midsize businesses can expect to see the largest jumps in year-over-year insurance costs, with some projections suggesting a 9% rise for companies with 50–499 employees. Driving these increases are not just inflation, but also changes in medical service utilization and prescription drug spending.

Who pays what? Employer vs. employee cost share

*Projections based on anticipated 6 to 7% increases.

Employees benefit from lower-cost premiums through employer health insurance. On average:

• Employers shoulder about 84 percent of premiums for single coverage and roughly 75 percent for family coverage, according to the KFF Employer Health Benefits Survey.
• Employees pay the remainder: about $132 a month for single coverage and $625 a month for family coverage.
• For the year, the average employee’s share comes out to $1,368 (single) or $6,296 (family).

Premiums are just one piece of the picture. Shared financial responsibility also includes:

• Health savings accounts (HSAs): Tax-free savings for medical expenses, with both employers and employees able to contribute, and funds that can be rolled over year-to-year.
• Flexible spending accounts (FSAs): Pretax accounts set aside for healthcare costs; these typically must be used by year-end.
• Deductibles and copays: Employees must pay out of pocket for medical care up to the deductible before insurance covers additional costs. The average deductible for single coverage is about $1,787.
• Coinsurance: Employees are often responsible for 20% or more of costs after meeting the deductible.

Shared employer and employee health insurance costs help keep coverage accessible, but shifting more costs to workers can impact recruitment and retention, especially as premiums and out-of-pocket costs continue to rise.

What’s driving health insurance cost increases?

Several factors fuel the rising price of employer-sponsored coverage each year:

• Medical and prescription inflation: Rising medical service costs and the increased use of specialty drugs—especially weight-loss and diabetes medications like GLP-1s—are major contributors.
• Healthcare worker shortages and provider consolidation: Labor shortages have driven up wages in the health sector, while hospital and provider group consolidations reduce competition and drive up prices.
• Coverage expansion and plan design: Employer demand for enhanced benefits, such as expanded mental health and family-building coverage, adds to plan costs.
• Return to pre-pandemic healthcare usage: Increased demand for medical services after deferred care periods means higher costs for insurers.
• Regulatory effects: Transparency in health plan pricing and shifting government requirements contribute to cost volatility.

Strategies to manage premium costs

Business owners can use proactive tactics to minimize health insurance costs for themselves and their employees:

1. Shop around with an insurance agent or broker: Options like group health-sharing, traditional group plans, ACA marketplace plans, or level-funded plans may help lower costs. “By having the opportunity to learn and compare from multiple carriers, you can be sure you are getting the best benefits structure with the best rates available,” said Michael Stahl, former chief marketing officer at UnitedHealthcare.
2. Encourage proactive healthcare habits: Employees who take part in exercise programs or see primary care doctors regularly may qualify for premium discounts or rebates through some insurers.
3. Shift cost-sharing to employees: Choosing plans with higher deductibles or out-of-pocket expenses can reduce business owner costs, but may affect employee satisfaction and retention. [Related article: How Much Workers’ Comp Insurance Do You Need?]
4. Encourage prescription drug discounts: Employees can save significantly by choosing generic medications and seeking direct discounts or coupons from pharmaceutical companies.
5. Consider HRAs, HSAs, and FSAs: Exploring benefit account options may help defray costs while reducing tax burdens for both businesses and employees.
6. Implement workplace wellness programs: Incentives for preventive care and healthy habits can lead to lower overall claims, keeping premium costs in check.

Sean Peek contributed to this article. Source interviews were conducted for a previous version of this article.